FICCI-KPMG-Report-13-FRAMES

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160 The power of a billion: Realizing the Indian dream Key sectors Unlike in 2011, when 76 percent 3 of Out of Home (OOH) media consumption was concentrated amongst four industry sectors, 2012 saw increased contribution from other industries such as auto, retail, white goods and real estate. Contribution of various sectors to the OOH Industry Source: Industry discussions conducted by KPMG in India Although revenues from telecom had dipped in first half (H1) 2012, the category gained momentum with a slew of new tablets and laptops device launches in the market, especially in the festive season of second half (H2) 2012. FMCG also bounced back with 14 percent growth in the sector 3 , contributing significantly to outdoor this year in comparison to earlier years. However, there was a significant decline in the Financial Services sector. Considering the local presence and strategic importance of outdoor media, it may be best suited for local brands and it is expected that sectors such as food and beverage, education, small format retail and jewellery will contribute to growth going forward. 03. Industry discussions conducted by KPMG in India © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
The power of a billion: Realizing the Indian dream 161 Formats Billboards are on course to remain the medium of choice, although other formats may gradually gain share over time. Revenue split by various formats Source: Industry discussions conducted by KPMG in India The transit OOH business in India, especially in airports and metros, has experienced rapid growth over the past few years. Brands such as Hyundai, Tata Photon, Intel, ING Vysa, Microsoft and others have been prominent. With various airport modernization and new metro projects in the pipeline, this format is expected to outpace other segments with a CAGR of 11 percent 4 . Formats such as airport OOH are well placed with a well-defined environment and, a target audience which can be profiled more accurately. Reflective of this trend, two stations of the Rapid Metro Rail Gurgaon line (‘RMGL’) will be branded as Vodafone and Micromax stations as the two telecom companies have entered into a memorandum of understanding with the operator, RMGL, for a full fledged branding exercise. New channels such as bus shelters, LED billboards and street furniture are not being leveraged as widely in India as they are in other countries, where they form as much as 30 percent to 40 percent of the total industry 5 . This is primarily attributable to poor infrastructure and the absence of a secure environment (fear of theft or vandalism). Limited customization of content to suit the medium is another obstacle currently. “ The transit segment continued to make further strides. Digital OOH is paving the way for integration of mobile and outdoor advertising. The holistic development of the medium is attracting new categories of advertisers and augurs well for the future of outdoor advertising 04. KPMG in India analysis 05. Industry discussions conducted by KPMG in India “ - N Subramanian Group CFO, Entertainment Network (India) Limited A step in the right direction In the union budget for 2012-13, the then Finance Minister, Shri Pranab Mukherjee announced that ‘selling of space or time slots for advertisements other than advertisements broadcast by radio or television’ will be exempt from 12 percent service tax’. While this service tax exemption freed budgets for spending on campaigns, the industry did not reap benefits due to impacts of the economic slowdown. Another positive development was Media Research Users Council’s (‘MRUC’) announcement of India Outdoor Survey (IOS) next edition. Along with IOS, IOAA’s announcement of ADEX as well as inventory availability information online will help build confidence in the medium as well as increase use of OOH not as residual media, but planned media. The resurgence of media owner-led solution business has been another noticeable industry move. All major media owners are now focusing on direct clients. Also, there is emerging consciousness amongst media owners to limit on bidding for unviable tenders – eg. participation in Amritsar, Guwahati Airport tenders was poor as the reserve price was ambitious. • Key challenges -- Lack of unified common measurement platform hampering the industry Reliable research is crucial for the OOH industry, but the measurement system has not taken off as intended. MRUC’s announcement of the next edition of IOS and indications of a couple of private parties also taking this up, appear to be steps in this direction. -- Apathy of civic agencies towards outdoor media. There have been widespread calls for tangible steps to taken by civic agencies to ‘promote’ outdoor media and not to ‘control’ it. Despite heavy license fees and taxes, permissions from various authorities and lack of clarity on regulations continue to create operational challenges for the industry. © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
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